On October 20, under the background of A-share market shrinking and rising, financial sectors such as banks, insurance and securities companies took a rest. Some of the leading financial stocks have seen significant gains since October. China Merchants Bank, Ping An Bank, China Life Insurance and other financial stocks have risen more than 10% since October, according to wind data. Among them, Ping An Bank, with the largest increase, has increased by 15.62% since October.
For the recent strong performance of leading financial stocks, star stone investment chief research official Lei said that the recent performance of large financial sector is outstanding, mainly due to three factors. First, the fundamentals have improved. Under the background of sustained recovery of domestic economy, the fundamentals of banks have improved substantially, and the generation of non-performing loans and the pressure of credit cost are better than previously expected. Second, valuation repair. The valuation of financial sector, especially bank stocks, was at a historical low. As of October 19, the average price to book ratio of Shenwan banking industry was only 0.71 times, basically at the lowest level in history. Third, near the year-end assessment, institutional investors such as public offering, private placement and insurance tend to increase the distribution of undervalued sectors, so as to lock in annual returns and increase the allocation demand for undervalued sectors such as banks.
Long time, novel coronavirus pneumonia and the policy making profit are the main factors to suppress the A shares, which have long been abandoned by most investors. Behind the recent strength is actually the repair of the excessive pessimism of the early market. The agency believes that, taking the banking sector as an example, the 1.5 trillion yuan profit concession policy of the banking industry in the early stage has little impact on the overall performance of the industry. Under the epidemic situation, the quality of bank assets did not deteriorate. Instead, policy guidance accelerated the stock clearing, and the industry has ushered in a good investment opportunity.
The pattern of leading the rise will continue
For the overall strategy of large financial sector, minority investors point out that from the historical experience of a shares, the recovery of low expectation plate often starts from the leader, but it is not limited to this. Market excess return comes from the misunderstanding of most people. For the large financial sector with low attention, the pricing of A-share market is not sufficient. In particular, the fundamentals of individual banks are significantly better than those of peers, but the valuation difference is not large. Investors should pay more attention to the detail splitting of fundamentals and return risk ratio of different financial stocks.
Wang Yicong, chairman of Mingyu assets, said that the recent economic and financial data in September confirmed the signal of sustained economic recovery, especially the growth rate of PPI was still in the recovery channel. Therefore, the value biased banking, insurance and other sectors in the cycle plate may be gradually entering the elastic range of stock price, which is worth optimistic on the whole.
Fang Lei believes that in the medium term, the banking sector is highly related to macroeconomic operation and has a strong cyclical attribute. Therefore, whether the rising market of bank stocks can continue in the future, we need to focus on the strength of economic recovery and the growth of bank profits. In addition, due to the fact that the market has fully reflected the downward trend of interest rates and the yield of interest rates in the early stage, the valuation of the superimposed banking sector is at a historical low. In the medium term, the financial sector with fundamentals bottoming out and rebounding is worthy of attention.
Source: Ren Hui, editor in charge of China Securities Journal_ NBJ9607